As special counsel Robert Mueller builds his case, relatives of former National Security Adviser Michael Flynn are among those pressing the president to use his unique legal power and ‘put these defendants out of their misery.’

Apple Chief Executive Tim Cook is at least half-right when he describes as “political” the European Commission’s demand that Ireland should claw back €13 billion in forgone taxes from the American computer giant. The decision, he told Irish radio, had no basis in law or the facts of the case.

Margrethe Vestager, the European commissioner for competition, denies that the decision is politically motivated. The European Court of Justice, she claims, is not interested in politics, just the facts.

Yet there is no denying that the Apple case is profoundly political in its consequences and has now set in train a very political battle for the backing of Europe’s finance ministers. Vestager has put into play — in the most high-profile way possible — the question of who runs Europe.

Not everyone perceives the struggle in those terms. The Irish government and its supporters dispute the Commission’s move into investigating tax rulings, the agreements made between a national tax authority and an individual company (which have previously resulted in adverse judgments against Starbucks in the Netherlands and Fiat in Luxembourg). They would argue that Vestager has raised the question of who runs Ireland.

Margrethe Vestager has put into play the question of who runs Europe | Frederick Florin/AFP via Getty Images

And the United States Treasury Department has set out in a white paper its objections to Vestager’s recent tax investigations, complaining that the European Commission is laying claim to money that might be owed to the U.S. tax authorities. It implies that the EU is interfering with who runs the U.S.

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The EU-U.S. tensions are, however, a distracting decoration. Although it is tempting to see Vestager’s decision as continuing a tradition of European competition commissioners trying to cut American giants down to size (Mario Monti blocked GE’s takeover of Honeywell; Monti, Neelie Kroes and Joaquín Almunia pursued antitrust cases against Microsoft), that would be to ignore other nuances in the Apple conflict.

The Apple case raises the question of how much tax income other countries might be missing out on because of Ireland’s tax ruling.

First of all, Vestager’s target is the national governments of the EU. Her message is that tax competition cannot and should not mean a complete free-for-all. That is the same message she previously delivered by way of similar state aid rulings to the Netherlands, Luxembourg and Belgium — but the sums involved in the Apple case are so great as to make other countries sit up and take notice. More than previous cases, this one raises the question of how much tax income other countries might be missing out on because of Ireland’s tax ruling. And her message is that if the EU does not stand united, the only beneficiaries will be the multinationals playing fiscal arbitrage.

The message is not in itself a new one. The EU’s debate about what constitutes fair or unfair tax competition has flared at various moments in the past — in 1998-1999 over Ireland’s corporation tax and in 2009 over Slovakia’s tax rates for car companies, for instance.

What is new, however, is the method chosen by the Commission to push its argument — exercising its powers to police state aid. The idea has been kicking around for some time. Monti, who had been single market commissioner before taking the competition portfolio, argued that unfair tax competition and the threat it posed to the single market had to be countered by use of state aid powers.

Vestager is more willing than her predecessors to test the extent of the Commission’s powers.

But back then there was no willing alliance between the commissioners for the single market and competition. Those posts were held by a succession of people who were skeptical about giving the EU more power over member countries and who were by nationality protective of low-tax arrangements: Frits Bolkestein from the Netherlands, Charlie McCreevy from Ireland and Kroes from the Netherlands. And the Spaniard Almunia, who held the competition portfolio from 2010-2014, was no innovator.

In addition, Vestager is more willing than her predecessors to test the extent of the Commission’s powers, though her concerted use of state-aid inquiries looks likely to be challenged by Ireland and Apple in the European Court of Justice. That is not the only fight-back she must face down: U.S. Treasury Secretary Jack Lew wrote to Vestager earlier this year suggesting that her attack on tax rulings puts at risk the existing cooperation in international fora — in the G20 and the Organisation for Economic Cooperation and Development. Apple, too, has accused the Commission of trying to “upend the international tax system.”

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What is significant about that line of challenge is that it seeks to appeal to EU finance ministers, who retain the prerogative to negotiate on tax issues in international fora. The Commission’s powers over taxation are much more circumscribed than on competition. The U.S. government is hoping that a combination of the finance ministers and Jean-Claude Juncker, the Commission president, might rein in the meddlesome competition commissioner.

Vestager stands accused of threatening a developing consensus that governments must work together to combat tax evasion. That trend was accelerated by the financial crisis, which put public revenues under severe strain, by the crackdown on money-laundering and organized crime which curtailed the room for secrecy, and by the LuxLeaks and Panama Papers revelations. The finance ministers must decide whether Vestager’s inquiries are part of that trend or run counter to it.

It’s clear where Michael Noonan, Ireland’s finance minister, stands, but it is hard at this stage to know how the various other finance ministers might react to the information being brought to light by the Commission’s inquiries.

Those who defend Ireland’s right to style itself as a low-tax economy are quick to point out that Vestager hails from Denmark, a high-tax economy. But they might also pay attention to another supposed characteristic of the Danes — a Lutheran-inspired fondness for openness and transparency.

Apple was paying only €50 of tax per million euro of profit.

It’s a significant feature of the state aid inquiry that Vestager gets to make public at least some of the terms of tax rulings that were previously secret between national authorities and the multinational corporations.

In doing so, the Commission may widen divisions between the finance ministers — exposing both to the ministers and to their electorates the tax revenue that is effectively not being collected. Sven Giegold, a leading German Green member of the European Parliament’s economic and monetary affairs committee, was quick to express mischievous surprise that Wolfgang Schäuble, Germany’s finance minister, was not more concerned about the loss of revenue. Until his recent wobble over Spain and Portugal, Schäuble had always taken a hard line in demanding that other national governments should reduce their budget deficits.

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Publishing details from the tax rulings should also help Vestager in her struggle to win the backing of European consumers. Her revelations that in 2014 the company was paying only €50 of tax per million euro of profit, and that Apple International in Ireland, through which the company’s revenue was channeled, had no premises and no employees in Ireland, might not cut much ice with tax lawyers and accountants, but they will play well in the court of European public opinion.

The Irish government has failed in its duty to be fair — a duty that it owed not just to its own citizens but to the other EU member countries.

Apple may be a darling of consumer electronics, but it does not follow that consumers will give it a free fiscal pass. Nobody likes paying taxes. What they like even less is having to pay taxes while watching others escape them.

Vestager has couched her demand that Ireland must recover the state aid as one of fairness: Taxes must be paid and one company cannot be given special treatment. The claim to be an arbiter of fairness is a very important one. The underlying message is that the Irish government has failed in its duty to be fair — a duty that it owed not just to its own citizens but to the other EU member countries.

The assertion made by Wednesday’s Commission decision is that, if an individual country can’t stand up to the likes of Apple, Google, Microsoft and — lest José Manuel Barroso is forgotten — Goldman Sachs, the EU will. If not Margrethe Vestager, then who? If not the European Union, then what? Those are profoundly political questions.

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D. Battabong

Ms. Vestager, keep your faith, keep both hands on the wheel. You are doing what no politician in the western world has had the courage to do since… a long time. I applaud you and support you.

Posted on 9/2/16 | 7:08 PM CET

Latimer Alder

As the EU deliberately drives jobs, investment and prosperity away from itself this is a fantastic opportunity for UK to benefit from their economic suicide.

So glad we’ve left the unaccountable, antidemocratic and increasingly irrelevant group of 27 and rejoined the 168 in the Big Wide World

Vive le Brexit!

Posted on 9/4/16 | 9:59 AM CET

Ronan

Public sentiment in Ireland is very much against Vestager and her decision, it is fueling euro-skeptics too. Hearing lots of the same language as in the UK, not the media or just politicians but average members of the public.

Apple is no ordinary company, it commands a almost religious devotion and as far as sins go it is pretty clean in comparison to other large multi-nationals, while some may brush this off like in this article by Tim it has blunted the attack on Apple and made many unsure to side with the EU.

Lets not kid our-selves the ECJ is a rubber stamp court for extending EU powers, of course the appeal will fail, the Irish government knows this which is why it hesitated but then went ahead probably to just buy some time as an alternate strategy is figured out by Apple.

Posted on 9/4/16 | 10:05 AM CET

M. Mezo

Although Ireland has the right to be competitive within the EU based on it’s country specific tax strategy, the fact that Apple pays only 50 EUR cent on every million profit via Apple International is very disturbing. Despite the fact, that It might be fully compliant to Irish tax rules.

Posted on 9/5/16 | 11:32 AM CET

Daniel F.

Either bend over to Big Money or get branded as a commie. Paying €50 in taxes for every million € in profits is borderline criminal, even so for Apple, who thinks there’s USD to EUR parity.
I trust Ms. Verstaeger succeeds and sets a precedent.